Infiniti Capital to manage large Australian mandate using revolutionary analytics software

Opalesque Industry Updates -
Infiniti Capital today announced it has signed a significant advisory
mandate with an Australian institutional client, its first such deal in
the Australian market. The deal increases Infiniti Capital’s assets
under management and advice by several hundred million US dollars to
total over US$1 billion.

Infiniti Capital Chief Executive Ian Shearer says, “We are pleased to be
able to announce the first of what we hope will be many such initiatives
in Australia, which we see as a key growth market for Infiniti. As some
of our larger competitors have fallen by the wayside after being exposed
to Bernie Madoff or being caught in the systemic de-leveraging resulting
from the credit crisis, there are new opportunities for an innovative
company like us.”

The company has established a permanent Sydney office, strengthening its
Asian focus, which encompasses the head office in Hong Kong and
extensive back and middle office capabilities in Christchurch. It has
representatives visiting Japan regularly.

Darren Katz has been appointed as head of Infiniti Capital’s Australian
business. Katz, who brings a wealth of local knowledge from his previous
role at HFA, sits on Infiniti Capital’s Investment Committee so is
involved in formulating the company’s investment strategy.

According to Katz, “The long-term expected returns of funds of funds, in
particular, lie between bonds and equities, depending on the composition
of the portfolio. The proper strategy for investment in funds of funds
is either as an adjunct to a balanced portfolio or superfund or as an
alternative to such funds for high net worth individuals.”

The collapse of the Madoff empire has irrevocably changed the funds
industry. Infiniti Capital’s Hong Kong-based CEO Ian Shearer says, “In
the post-Madoff world, some institutions are attempting to switch to
running their hedge fund books in-house. It is a clear response to the
failure of a number of large fund of funds shops to avoid exposure to
Madoff’s investment vehicles.

“However, the operational and qualitative due diligence process required
to adequately vet hedge funds requires a specific set of skills and can
be very labour and time intensive, often costing as much as US$10,000 to
US$15,000 per fund. If pension funds parcel out this work to their
existing staff, it is unlikely to produce better results in the medium
term,” he says.

“Infiniti Capital analysts have extensively evaluated more than 1000
hedge funds in the last five years and we have another 2700 funds on our
proprietary database. In addition, we have been expanding our
traditional funds of funds offering to include more systematic and
long-only products.”

New analytics software revolutionizes portfolio construction

Shearer says this has been aided by an internally developed suite of
analysis and portfolio management tools which is in the process of being
commercialised as the Infiniti Analytics Suite (IAS). See previous
coverage New analytics software revolutionizes portfolio
construction: Source and Modified Volatility - 1937 paper found
relevant to today's risk management challenges: Source

“Our frustrations with using existing modelling systems forced us to
develop our own. The software is designed to help portfolio managers
save time and money through more effective risk monitoring.”

In Japan, the financial world turmoil prompted institutions to defer
decisions about fund purchasing. “Japan remains our largest market and
we are pleased to see Japanese institutions begin allocating to hedge
funds again. There is a lot of interest in products that overcome the
perceived weakness of traditional funds of funds by providing improved
liquidity and transparency,” Shearer says.